Doms Industries IPO Opens For Subscription: Should You Invest Or Not?
The public issue presents an implied market capitalisation of Rs 4,794 crore, with a price-to-earnings ratio of 43 times.
Pencil-maker Doms Industries Ltd. is opening its Rs 1,200 crore initial public offering on Wednesday.
The maiden public issue, priced in the range of Rs 750–790 per share will conclude on Dec. 15.
The IPO consists of a fresh issue of 44.3 lakh shares, aggregating up to Rs 350 crore; and an offer for sale of 1.08 crore shares, aggregating up to Rs 850 crore by promoters.
The company aims to use the proceeds to finance the cost of establishing a new manufacturing facility to expand production capabilities for a wide range of writing instruments, water colour pens, markers and highlighters, and general corporate purposes.
How Its Valuation Compares With Listed Peers
Looking at the valuation at the upper price band, the public issue presents an implied market capitalisation of Rs 4,794 crore, with a price-to-earnings ratio of 43 times.
At the upper end of the price band, the company's price-to-earnings ratio is 43.2 times, which is higher than the industry average of 36 times, according to KRChoksey Shares and Securities Pvt. It recommends a 'Subscribe' rating for the issue.
"We believe the premium is justified given the company's robust market share, established distribution network, expansion of capacities and venturing into new markets, and strong revenue growth and profitability," it said.
Doms Industries had a two-year revenue compound annual growth rate of 73.5% between financial years 2021 and 2023, which is much higher than most of their listed industry peers, the brokerage said.
Anand Rathi Share and Stock Brokers Ltd. said that at the upper price band, the company is valuing at a P/E of 46 times, EV/Ebitda of 15.33 times and return on net worth of 28.39%. "We believe that valuation of the company is fairly priced and recommend a Subscribe-long-term rating to the IPO."
Doms Industries designs, develops, manufactures and sells a wide range of stationery and art products, primarily under their flagship brand, in the domestic market as well as in over 45 countries internationally.
They are the second largest player in India's branded stationery and art products market, with a market share of 12% by value, as of the last fiscal.
